Tax Type
Retail Sales and Use Tax
Description
Occasional sales, including mergers; Personal property held for sale.
Topic
Taxability of Persons and Transactions
Date Issued
10-27-1997
October 27, 1997
Re: § 58.1-1821 Application: Retail Sales and Use Tax
Dear*****************
This is in response to your letter of July 11, 1997 in which you seek correction of a sales and use tax assessment issued to*******(the "Taxpayer") for the period January through February 1997. I understand that the only remaining contested issue is the Taxpayer's purchase of tangible personal property from ********* (the"Seller").
FACTS
The Taxpayer operates as a Virginia restaurant and, in one transaction, purchased certain items from the Seller. ou contend that this transaction is an exempt occasional sale. To this end, you maintain that the Seller is in the business of real estate development and management. Also, you have submitted a letter from the Seller's representative indicating that the Seller is not required to have a sales tax certificate in Virginia.
In addition, you indicate that the department's assessment erroneously includes land and a building that were part of the contested purchase from the Seller.
DETERMINATION
Code of Virginia § 58.1-609.10(2) provides an exemption from the tax for an occasional sale as defined in § 58.1-602. That section defines an "occasional sale" as:
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- A sale of tangible personal property not held or used by a seller in the course of an activity for which he is required to hold a certificate of registration, including the sale or exchange of all or substantially all the assets of any business and the reorganization or liquidation of any business, provided such sale or exchange is not one of a series of sales and exchanges sufficient in number, scope and character to constitute an activity requiring the holding of a certificate of registration.
The department's records show that the Seller is a registered dealer. As such, the Seller holds a certificate of registration with the department to collect and remit the tax on its sales of tangible personal property in Virginia. Further, there is no evidence that the Seller has sold all or substantially all of its assets or has transacted a liquidation or reorganization of its business. Based on the information before me, l must conclude that the contested transaction is not an occasional sale.
You correctly point out that the tax does not apply to the purchase of real property. I understand, however, that the entire purchase was recorded by the Taxpayer as the purchase of "equipment." Nevertheless, the Taxpayer will be allowed 60 days to provide records or documents which clearly show that the assessment erroneously includes the purchase of real property. As warranted, and based on those records, the assessment associated with the contested transaction will be revised to reflect only the purchase of tangible personal property.
Pursuant to this determination, the audit will be returned to the audit staff who will review the additional information requested above. In the meantime, l will continue to suspend collection activity on the assessment for an additional 60 days.
If you have any questions regarding this letter, you may call**** in the department's Office of Tax Policy at ****** .
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/12965I
Rulings of the Tax Commissioner